Beyond Backfence and the hyperlocal hype

Writing for American Journalism Review, Paul Farhi ponders what the implosion of high-profile citizen journalism startup Backfence means for the “we” media and hyperlocal publishing movements.

The failure of Backfence may offer no greater lesson than the old one about pioneers being the ones with arrows in their backs. New ventures fail all the time. But it could also sound a cautionary note about the present–and immediate future–of hyperlocal news sites. As big-media companies and entrepreneurs alike rush into the hyperlocal arena, it’s worth pausing and asking: Is there a real business in this kind of business?

So far–and admittedly it’s still very early–the answer is no. A few of the estimated 500 or so “local-local” news sites claim to show a profit, but the overwhelming majority lose money, according to the first comprehensive survey of the field. The survey, conducted by J-Lab: The Institute for Interactive Journalism (affiliated with the University of Maryland’s Philip Merrill College of Journalism, as is AJR), documents a journalism movement that is simultaneously thriving and highly tenuous. …

In fact, many operators don’t really have a business model. The first wave of hyperlocal sites has featured seat-of-the-pants operations, staffed part-time by dedicated volunteers, community activists and impassioned gadflies.

Terry Heaton chimes in by observing that “Backfence was only a failure in its pre-defined business goals, but that doesn’t make the effort itself right or wrong. It could just as easily be that the business goals were off-the-mark. Investors want a return, after all.”

Heaton also highlights “two big problems with most hyperlocal efforts”:

One, we get hung up on content when content isn’t the problem. The question is how do you make money in a disintermediated, distributed media paradigm? Experiments in hyperlocal media don’t fail because of content; they fail, because they can’t deliver the promise of sustainable revenue. It is the advertising paradigm that’s the real problem, not how to make more or “hyperlocal” content that such advertising will support. …

Two, in terms of building sites that appeal to “local” people, we simply cannot begin with revenue assumptions. In fact, I would argue that this guarantees business failure right out of the box, because the whole business of local advertising is evolving. How on earth can we create a business plan based on revenue when we don’t know what that revenue play will be? We simply must have the courage to move forward to build audience before we tackle monetizing that audience. If we do this, we’ll build things differently, because we’ll approach the process differently.

Heaton also pulls together a roundup of salient commentary from other media-watchers, including Jeff Jarvis and Techcrunch, that offers “some real gems for those who are pursuing hyperlocal as a strategy.”